In April, the U.S. House of Representatives Appropriations Committee approved its FY27 National Security and Related Programs (NSRP) bill, which includes appropriations to the Multilateral Development Banks (MDBs), while the Administration released its President’s Budget Request (PBR). Both the House bill and the PBR fall short of the funding needed for the U.S. to meet its commitments to the World Bank’s International Development Association (IDA) and the African Development Fund (AfDF). In addition, both the House bill and PBR include misleading characterizations of the institutions’ climate-related work. As the appropriations process develops, BIC calls for the Senate State, Foreign Operations, and Related Programs (SFOPs) bill to fully fund U.S. commitments to IDA and AfDF, and to remove rhetoric that treats climate finance and climate-related targets as liabilities rather than core components of effective development and economic resilience.
Concessional funds face new pressure
The FY27 NSRP House bill would appropriate only roughly $500 million to the 21st replenishment of the International Development Association (IDA21), the World Bank’s concessional lending arm. This figure falls well below the $1.067 billion needed for the U.S. to fulfill its existing $3.2 billion commitment to IDA21. The Administration has already reduced the U.S. IDA21 pledge from $4 to $3.2 billion and further cuts to this replenishment would undermine IDA’s essential role in addressing development challenges in the world’s poorest countries. Senate appropriators should recognize this value and fully fund the U.S. commitment to IDA21 in FY27.
The PBR also requests the recission of $197 million from the African Development Fund (AfDF). The Administration’s retreat from the AfDF is a mistake, but withholding these funds, duly appropriated by Congress in FY25, raises new concerns regarding the U.S.’s credibility at the institutions. If appropriated funds can be withheld after Congress has made its commitments, it risks weakening U.S. standing and leverage at the MDBs.
The Administration should disburse funds previously appropriated to the AfDF. In addition, the U.S. still has outstanding commitments from AfDF’s previous replenishment cycle. We encourage Senate appropriators to consider providing funding for the remainder of the U.S. commitment to AfDF’s prior replenishment cycle.
Both the NSRP Bill and PBR place climate commitments at risk
The House bill includes language that would condition appropriations to the Inter-American Investment Corporation (IDB Invest), the private sector lending arm of the Inter-American Development Bank (IDB), on the removal of its existing climate finance target. The legislation also includes a provision prohibiting appropriations from being used to implement the Paris Agreement. If enacted, these provisions would signal to other MDBs that U.S. financial support may be conditional on climate-policy backsliding.
The Administration has already pressured the MDBs to drop their climate commitments. Treasury’s Congressional Budget Justification (CBJ) cites AfDF’s existing climate finance target as a reason to rescind funds from the institution, and the Administration’s efforts to kill the World Bank’s Climate Change Action Plan have already created division among its Executive Directors. The Administration argues that climate finance targets distort decision-making, and restrictions on fossil-fuel investment constrain borrowers.
We acknowledge that the MDBs’ climate finance targets are far from perfect. MDBs’ provision of climate finance suffers from a lack of transparency and consideration for fiscal sustainability. In many cases, these targets have been insufficient in driving a structural shift away from business-as-usual investments. Despite these issues, the MDBs’ Paris Alignment commitments and climate finance targets create incentives for the MDBs to better assess the climate and environmental impacts of their investments. Given that poverty is closely interlinked with the impacts of the climate crisis, retreating from these commitments would make the institutions less effective at addressing development challenges. To create better alignment with their poverty-fighting mandates, the MDBs should focus on more robust implementation of their climate commitments.
Furthermore, the Administration’s implication that renewable energy is unaffordable for developing countries is misleading. A 2025 report from the International Renewable Energy Agency (IRENA) found that the costs of renewable energy technology have fallen greatly since 2010, and 91 percent of new renewable projects commissioned in 2024 were cheaper than fossil fuel alternatives. Furthermore, the report suggests that prices may further fall in Latin America, Africa, and Asia as market growth amplifies cost reductions.
If the Administration and Congress want the MDBs to remain focused on their core mandates of poverty reduction and economic development, they should recognize that climate finance is integral to those goals. Climate impacts are already undermining economic growth, increasing food insecurity, deepening debt vulnerabilities, and pushing more communities into poverty across developing countries. Treating climate-related financing and targets as separate from the MDBs’ development mission ignores the clear connections between climate resilience, poverty reduction, and long-term economic stability. Rather than attacking the MDBs’ climate commitments, the Administration and Congress should fully fund institutions such as IDA and AfDF. Their concessional financing remains critical for helping borrower countries respond to interconnected development and climate challenges while maintaining U.S. leadership and credibility within the MDB system.
